Braemar Hotels & Resorts has entered into an agreement to acquire Mr. C Hotel, a 138-room luxury hotels in Beverly Hills. In addition to the hotel, the transaction also includes five condo residences adjacent to the property. The sale transaction is expected to close in July for $77.8 million. The hotel price tag was $65.4 million, while the condo properties cost $12.5 million.

This is Braemar Hotels & Resorts' first acquisition during the recovery cycle, and it is a complex one, involving OP units, warrants, and mortgage debt. The investor plans to execute a value-add strategy by maximizing operating performance of the hotel.

Braemar acquired the property with $30 million in cash, 2.5 million OP units, 500,000 warrants at a strike price of $6.00, and a $30 million mortgage loan. Ultimately, the property aligns the company's with strategy to acquire high RevPAR luxury hotels. The sale represents a 5% cap rate based on operating income from December 2019 of $3.9 million and a trailing 12-month 16.5x hotel EBITDA multiple. As a result, Braemar should realize a return of 8% in the next three-to-five years.